Headquartered in Huntington Beach, California, BioCentric Energy Inc. is primarily a research and development holding company. Their focus is on seeking innovative green energy solutions for the 21st Century. Trading on the Pink Sheets, the Company’s corporate mission is to increase their value through the discovery, development, and implementation of renewable energy projects.

BioCentric Energy, Inc. works to develop new technologies as well as acquire and foster companies with innovative technologies designed to provide unique and effective green energy solutions. The Company’s strategy leverages their extensive experience and global contacts to uncover opportunities through joint ventures or acquisitions.

The Company’s BioCentric Energy Algae is currently implementing two algae projects. One is in Lake Elsinore, California, and the other is in the Guangdong Province of China. They also have their BioCentric Energy Consortium Inc. The BioCentric Energy Consortium brokers the supply and delivery of organic oils, such as, crude, degummed soybean

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This year in Orange County, California, Deloitte LLP, member of a global finance consulting and advisory network, ranked the area’s top fifty technology, media, telecommunications, and life sciences companies in its highly-regarded Technology Fast 50 Program. To be eligible for the Fast 50, companies must have recorded revenue growth from at least $50,000 in 2003, to $5,000,000 or more in 2007, and they must have done so through the implement of some sort of proprietary technology or intellectual property.

For its mobile and fixed-telecom and content distribution solutions and explosive growth, Elephant Talk Communications received a fifth-place ranking in the prestigious Technology Fast 50 Program. While the average revenue growth for included companies stood at roughly 1,600 percent, Elephant Talk weighed-in heavily with an increase of 5,362 percent for the five year period.

“Sustaining high revenue growth over five years is an exceptional accomplishment,” said Deloitte’s Rob Lucenti. “We commend Elephant

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Headquartered in Los Angeles, California, EV Transportation Inc. is the parent company of EV Rental Cars, LLC. Founded in 1997, EV Rental Cars exclusively rents hybrid electric and low emissions vehicles. They are the first car rental company in the United States to rent only environmentally friendly vehicles to the public. The Company’s shares trade on the OTCBB.

Affiliated with Fox Rent-A-Car, EV’s fleet consists of more than 350 cars at seven locations throughout the United States. The Company’s airport locations include Los Angeles, Orange County, San Diego, San Francisco, Oakland, and San Jose, California. They also have their site in Phoenix, Arizona. The company has the distinction of preventing more than 100 tons of air pollution and have passed to their customers over one million dollars in fuel cost savings. EV Rental Cars growth in recent years now has their yearly revenues close to four million dollars.

EV won an Automotive

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This week I am in California giving two speeches to the Financial Planning Associations of San Diego and Orange County. This and next week’s letters will be the broad outline of the speech. We will look at how the retreat of the American consumer will affect the stock market. Has the recent drop (can we say crash, gentle reader?) in stock market valuations given us an opportunity to find value? We look at some very powerful evidence that suggests that may be so.

Then we look at the counter to that view. Are we at the bottom, or is there more pain? And given the current state of affairs, how should we then invest? Where do we put our money to work when the dust settles, as it surely will.

As I noted above, this will be a two-part letter, finishing up next week. It will also print out a lot longer than normal as I have a lot of PowerPoint slides that are really important for you to see. A note to the 25% of my one million-plus readers who are outside the US: I am using illustrations from the US stock market to discuss timing and valuations, but the principles will translate to markets worldwide. In fact, considering that most stock markets worldwide are down even more than the US markets, they may be even more applicable. The time to become bullish on a lot of markets may be closer than we think. Let’s jump right in.

The Psyche of the American Consumer

You have to have a bit of humor, and I think this cartoon says a lot.

The psyche of the American consumer has been seared, and perhaps permanently, reminiscent of the manner in which our grandparents who lived during the Great Depression were permanently scarred with the memories of that time. How it works out will be different this time, of course, and we will explore that later on. But one thing that is very likely is a major impact on consumer spending going forward. Let’s look at a few facts on the state of the consumer.

The Consumer Weakens

Retail sales have fallen for the last three months. This is the first time sales have fallen in such a manner since the record keeping began. They are falling at an annual rate of 2%, which is unprecedented.

Auto sales are down, virtually in free fall, with many auto company sales down more than 30% (Volvo is down 50%!). And it may get worse. GMAC, the financing arm of GM, has announced it will not lend to anyone whose credit score is not 700 or more! Only 58% of Americans qualify. That means, for a large swath of the consumer marketplace, cheap auto financing is a thing of the past, unless auto companies underwrite loans with guarantees.

However, what we are seeing is auto companies abandoning leasing programs and other traditional marketing avenues in order to search for elusive profits. Where you could buy a car two years ago for little or no money down, many dealers are now requiring an average of 12% down. While this makes sense, it is definitely a change.

And it is not just in the US. Auto sales throughout Europe are off significantly, especially in countries that had their own equivalent of the US housing bubble.

How bad is it? We are becoming a morose nation, staying at home to drown our sorrows - even bar sales are down, almost 1%. While I am sure this audience is doing its part to help out the bartenders of the world, our clients are not.

Falling consumer and retail sales are not surprising, given the fact that almost one million jobs have been lost in the last 12 months, bringing unemployment to 6.1%. California, which is a bellwether state, has seen its unemployment rise to 7.7%. That is a (sadly) reasonable target for nationwide unemployment. Back-of-the-napkin analysis suggests that means at least another million jobs will be lost this cycle.

Falling consumer sales are showing up in the share prices of retailers and shopping mall REITs. Many are down to prices last seen 12-16 years ago, with price drops far below the market averages. Think Vegas is immune? MGM and Trump, to name just two, are down 90%!

But we lost a lot of jobs in the last (2001-2002) recession, and consumer spending did not go down. Won’t the present trend reverse soon? Might it not just be from the shock of the credit crisis? And with gasoline prices down, giving us a $100 billion plus “tax break,” is the worst not over?

It is reasonable therefore to ask why it should be different this time. Predicting the demise of the American consumer has been a favorite pastime of bearish analysts for over 50 years. And they have always been wrong. The American consumer has proven resilient through feast and famine, war and peace. But, the data and circumstances suggest this time may be different.

Let’s look at the data that came out this week on the delinquency rates of various types of consumer debt. The delinquency rate on auto loans is 3.8%, up from 2.9% two years ago. Consumer finance? Up to a very high 8.3%. Credit card delinquencies are 4.8%, rising from 4%.  Is it any wonder credit card companies are cutting credit lines and raising interest rates to try and stem the bleeding? Mortgage delinquencies have doubled from 2.5% to a current 5%. Consumer credit in general is up to 5% delinquent, more than two-thirds higher than two years ago. This is all illustrative of a consumer in trouble.

Look at this next chart from John Burn Real Estate Consulting. He surveys hundreds of homebuilders nationwide. The long and short of it is that new home sales forecasts are at all-time lows. Traffic (potential buyers) looking at new homes is dismal. In my own area in Dallas, there are brand new homes which builders are willing to lease at very attractive rates in order to generate some cash flow, at much less than the cost of buying. And given the level of prospective buyers looking for a new home, that is a trend likely to continue.

I should note that this morning housing permits fell to a 26-year low, around 786,000. But that statistic can be misleading. Back in 1982, the population of the US was 230 million. Today it is 305 million. We are roughly one-third larger. If you adjust for population, the number would be in the 600,000 range, which is far worse than a mere 26-year low. Those permits mean jobs, and permits need to rise with the population to maintain the job base.

And since we’re looking at today’s data, the Michigan consumer sentiment number simply fell off a cliff, plunging to 57 from over 70 last month and an average of 85 last year. It was only a few years ago that the number was over 100. The last time it was this low? We were in the midst of a very serious recession in 1982.

Let’s get back to housing. This next chart is from www.dismal.com, showing the fall-off in mortgage applications. Mortgage applications for purchase are down by over 30% since the end of 2007, and down much more than that from the peak of 2006, as the subprime lending market has disappeared.

Let’s pay particular attention to the fall-off in applications for re-financing, down by almost 60%. This was the source of mortgage equity withdrawals, which fueled consumer-spending growth even in the face of the last recession. Let’s look at a graph I used two years ago, from work done by James Kennedy and Alan Greenspan, on the effect of mortgage equity withdrawals (MEWs) on the growth of the US economy.

Notice that in both 2001 and 2002, the US economy continued to grow on an annual basis (the “technical” recession was just a few quarters). Their work suggests that this growth was entirely due to MEWs. In fact, MEWs contributed over 3% to GDP growth in 2004 and 2005, and 2% in 2006. Without US homeowners using their homes as an ATM, the economy would have been very sluggish indeed, averaging much less than 1% for the six years of the Bush presidency. Indeed, as a side observation, without home equity withdrawals the economy would have been so bad it would have been almost impossible for Bush to have won a second term.

Now let’s look at the update that James Kennedy posted last week to his numbers. While he does not have an update to the chart above, we do have the actual numbers for new mortgage equity withdrawals through the second quarter of this year. And what they show is MEWs simply withering on the vine. The engine of our GDP growth has essentially been turned off. Look at the fall in the numbers for yourself:

In 2005 there was almost $595 billion in mortgage extractions that went into some kind of consumer spending. Remember, according to the graph above, that translated into a 3% rise in GDP. In 2007, MEWs were down to $470 billion, for a boost of 2% to GDP.

The second quarter of 2008 saw an anemic $9.5 billion. At that run rate, we could see a drop-off of over 90% from 2005! Now, think what the second quarter would have been without the federal stimulus program of $150 billion. It might have looked and felt like this quarter!

Turning from the mind-rattling analyses of financial stocks for a bit, we sat down with Zacks senior equities analyst John Nelson Simon for a discussion on a sector thatÂ’s easier to sink oneÂ’s teeth into: engineering & construction.

What is your current outlook for Engineering & Construction (E&C) stocks these days?

Conditions are such that the E&C companies, collectively, are doing quite well. The demand for energy, the need for support in war zones, the crumbling infrastructure, the emerging countries -- all are requiring their help. In fact, it's come to a point where the demand is so strong that customers in some cases are willing to go to cost-plus contracting rather than fixed-price. That doesn't happen very often.

In light of what weÂ’ve seen in the financial sector recently, is it better to invest in an industry that manufactures goods?

I don't feel qualified to pick

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A couple of anecdotes.Yesterday at the studio for my segment just about everyone there was asking me about the market and what to do. One of the guys looked at his 401k balance while I was there and he became bummed out.A couple of different friends said they saw the segment but didn't really know what the segment was about.The first one tells me that people who don't usually follow the market closely are paying more attention than normal. Obviously this belies more fear or some other emotion as the market is lower and maybe the regular news covering it more than normal too. BTW my visit to the dentist on Monday was similar.The second anecdote might be important. The segment was about the (financial) news of the day but still it was difficult to follow for ...